‘Indian airline industry bit more than it can chew’

Dinesh Keskar, president of Boeing India, a civil aviation industry veteran who has been dealing with airlines in India for decades. In an interview with ET NOW, he said Boeing has managed to avoid aircraft order cancellations till now and new orders are unlikely now. Excerpts:
Is overcapacity the one of the key factors that has landed Indian airline companies in trouble?
Most certainly. In fact, we have been saying that. While the growth was very good about three years ago, it (Indian airline industry) did bite more then it can chew. The industry got too many airplanes in a hurry and that caused a significant increase in capacity. The growth rate was in excess of 40%, but half of that growth was what I consider was organic growth... meaning it was real, but the other half was stimulated by very low fares and that gave a false sort of expectation that India is going to grow very big. Even now, there is overcapacity to the tune of 15-20%, which is forcing everybody to put the fares down and creating a situation where nobody is making any money.
Does that mean cancellation of orders for aircraft manufacturers like Boeing?
Well, we have been fortunate. First of all, we picked and chose our customers very carefully in India. We don’t expect any cancellation. We haven’t had any so far. We had some deferrals in the past. Of course, when economy gets so bad worldwide, clearly there is going to be some implication, but we have been very successful so far in not getting any cancellation.
Do you expect Air India to retain its orders despite its mounting losses?
Well, again as I mentioned, we have not had any cancellation, we have not heard from Air India that they would like to cancel anything. We share the pain that Air India is going through. In fact, Air India is not the only airline in the world that is suffering. I was at a meeting in Kuala Lumpur past month, where every major airline in the world was complaining about the traffic going down. Air India is no exception, but they are creating a modern fleet and I think they will stick to their plan, if they have to reschedule some deliveries, we will certainly be able to talk to them. So far, we have not seen any communication from them on the subject yet.
What about other customers?
We have been very fortunate. We have done business worth $25 billion with India, between Air India, Jet Airways, SpiceJet and three very prestigious Boeing business jets for VVIP fleet, which is flown by Indian Air Force for top people like the Prime Minister. As I said, we are focused on keeping the orders that we have sold and working through the cycle. I think we are very well placed for the future, but in the near term, we don’t expect any orders, but we are not expecting any cancellation either.
23/07/09 G Ganapathy Subramaniam/Economic Times

To Read the News in full at Source, Click the Headline

Categories: Foreign Jul 2009, Indian Aviation- In General Jul 2009